3 ms·

too much cash, not enough stuff. inflation is coming.

by jgalt212 6y ago

ClumsyPilot 6y ago
Uh no people dont doubke their coffee consumption because they have more money
- neckardt 6y ago
  But if people have more money, wouldn't that mean producers could raise their prices and people would still be willing to pay it?
  - gruez 6y ago
    Only if they coordinate and act like a cartel. Otherwise it's a prisoner's dilemma situation where the party that doesn't raise prices gains market share.
    - xoa 6y ago
      No coordination needed in a supply limited scenario with sufficiently inelastic demand. That's not a prisoner's dilemma. In that case every single bag has multiple potential interested buyers, which means each supplier can individually have buyers bid against each other and see the sale price go up. Organization of course might let them do even better, but it's not necessary. There is no market share to be gained from the supplier point of view (though as the article says, those higher up the chain may have different motives and margins) because supply just can't be ramped up instantly with a good like coffee. It doesn't matter if a farmer would in principle like to have 10x as much to sell, they have what they grew, and could only respond to demand by increasing supply slowly (and there is the risk of overshoot). If they don't raise prices they're just leaving money on the table, since every bag will get bought.
    - nostrademons 6y ago
      That's where the supply shortage comes in. If lots of people have money but there's excess capacity in the market, nobody will raise prices because the firm that doesn't ramps up capacity and captures the excess market share. If lots of people have money but there's a supply shortage, the firm that refuses to raise prices lacks the excess capacity to capitalize on their consumer demand, and fails to gain market share.
- jgalt212 6y ago
  I'm not talking about coffee, I'm talking about the missing pieces in the supply chain. There's too much cash, i.e. Bitcoin the moon, and not enough stuff (i.e. we are short the needed shipping containers to reboot the post COVID economy). It's gonna be like the years immediately after WW2. Everyone wants a car, but the factories have not fully moved back to making consumer goods.
sdenton4 6y ago
too much cash, not enough stuff. jobs are coming.
astrange 6y ago
Inflation is not happening. There are a lot of relative price increases because everyone being stuck at home changed demand severely, and people stopped traveling so many better-off families increased savings a lot. The money printers are going to debt service and savings more than spending, which wouldn't increase inflation. One reason people might think it's going up is that it makes you look cool and wise to say it is; another is that SV is expensive so you might think the rest of the world is too. But much of the world has negative interest rates, that's deflation. https://noahpinion.substack.com/p/your-local-price-changes-arent-inflation https://noahpinion.substack.com/p/your-local-price-changes-a...
- perl4ever 6y ago
  I don't claim inflation has been happening yet - people have been crying wolf for a long time. But something has changed. The fed is determined not to raise interest rates until there is serious inflation, and a lot of politically minded people are looking at trillions in stimulus and seriously saying the idea that we have to pay for spending with tax revenue was always a lie that we should now be free of. It's easy to view inertia as evidence nothing is changing.
  - astrange 6y ago
    One thing making it okay is that it's not really stimulus, it's disaster relief. A lot of it is going to repay debt, which instantly destroys it, and more is going to savings. If it was spent it would cause inflation, but that's fine because we've been under our target forever, not that there was ever a real reason 2% was a target.

too much cash, not enough stuff. inflation is coming.

ClumsyPilot 6y ago

Uh no people dont doubke their coffee consumption because they have more money

neckardt 6y ago
But if people have more money, wouldn't that mean producers could raise their prices and people would still be willing to pay it?
- gruez 6y ago
  Only if they coordinate and act like a cartel. Otherwise it's a prisoner's dilemma situation where the party that doesn't raise prices gains market share.
  - xoa 6y ago
    No coordination needed in a supply limited scenario with sufficiently inelastic demand. That's not a prisoner's dilemma. In that case every single bag has multiple potential interested buyers, which means each supplier can individually have buyers bid against each other and see the sale price go up. Organization of course might let them do even better, but it's not necessary. There is no market share to be gained from the supplier point of view (though as the article says, those higher up the chain may have different motives and margins) because supply just can't be ramped up instantly with a good like coffee. It doesn't matter if a farmer would in principle like to have 10x as much to sell, they have what they grew, and could only respond to demand by increasing supply slowly (and there is the risk of overshoot). If they don't raise prices they're just leaving money on the table, since every bag will get bought.
  - nostrademons 6y ago
    That's where the supply shortage comes in. If lots of people have money but there's excess capacity in the market, nobody will raise prices because the firm that doesn't ramps up capacity and captures the excess market share. If lots of people have money but there's a supply shortage, the firm that refuses to raise prices lacks the excess capacity to capitalize on their consumer demand, and fails to gain market share.
jgalt212 6y ago
I'm not talking about coffee, I'm talking about the missing pieces in the supply chain. There's too much cash, i.e. Bitcoin the moon, and not enough stuff (i.e. we are short the needed shipping containers to reboot the post COVID economy). It's gonna be like the years immediately after WW2. Everyone wants a car, but the factories have not fully moved back to making consumer goods.

sdenton4 6y ago

too much cash, not enough stuff. jobs are coming.

astrange 6y ago

Inflation is not happening. There are a lot of relative price increases because everyone being stuck at home changed demand severely, and people stopped traveling so many better-off families increased savings a lot. The money printers are going to debt service and savings more than spending, which wouldn't increase inflation. One reason people might think it's going up is that it makes you look cool and wise to say it is; another is that SV is expensive so you might think the rest of the world is too. But much of the world has negative interest rates, that's deflation. https://noahpinion.substack.com/p/your-local-price-changes-arent-inflation https://noahpinion.substack.com/p/your-local-price-changes-a...

perl4ever 6y ago
I don't claim inflation has been happening yet - people have been crying wolf for a long time. But something has changed. The fed is determined not to raise interest rates until there is serious inflation, and a lot of politically minded people are looking at trillions in stimulus and seriously saying the idea that we have to pay for spending with tax revenue was always a lie that we should now be free of. It's easy to view inertia as evidence nothing is changing.
- astrange 6y ago
  One thing making it okay is that it's not really stimulus, it's disaster relief. A lot of it is going to repay debt, which instantly destroys it, and more is going to savings. If it was spent it would cause inflation, but that's fine because we've been under our target forever, not that there was ever a real reason 2% was a target.